Issue opens today and it will close on July 29. For anchor investors, had opened on July 26.
Recap of news:
The company had earlier come out with a pre-IPO placement which was extremely successful as it managed to place 4.06% stake with Capital International PE for Rs 330 crore. Six crore shares were bought by the private equity at Rs55 per share.
After this successful pre-ipo placement the company brought down its original plan to raise Rs 1,245 crore to Rs 1,092 crore.
L&T Finance has also raised about Rs 153 crore from anchor investors for its IPO so far. According to sources, anchor investors have picked the shares at the price of Rs 56 per share.
About the company:
As of now, the parent company L&T holds 95.94% shares in the company, the rest is held by the US based private equity Capital International which had received the shares though pre-ipo placement as mentioned above.
L&T Finance Holdings has the following subsidiaries: L&T Finance (into retail and corporate finance), L&T Infrastructure Finance and India Infrastructure Developers. It also has investments in Federal Bank, City Union Bank, Invent Asset Reconstruction Company and NAC Infrastructure Company.
The IPO details:
Post listing, if the company achieve's full subscription, L&T's stake in the company will come down to 83%.
The lead bankers for the book running are Citigroup, JM Financial and HSBC; meanwhile Credit Suisse and Barclays are co-lead managers.
Of the Rs 1,092 crore offered in IPO, Rs 50 crore is reserved for employees, Rs 120 crore for existing L&T shareholders, Rs 537.5 crore for qualified institutional buyers (QIBs), Rs 161.25 crore for non-institutional investors (HNIs) and Rs 376.25 crore for retail investors.
Plans of using the proceeds
Out of the amount raised there are plans to infuse Rs 515 crore in L&T Finance and Rs 485 crore in L& T Infrastructure Finance to meet capital adequacy requirements. Remaining funds will be used to repay L&T's inter-corporate deposits and for general corporate purposes.
The two rating agencies, CRISIL and CARE have given the highest grades indicating strong fundamentals of the company.
Should you buy? The company has a strong balance sheet and a well established infrastructure finance business. Its financial product distribution business is growing rapidly. The strong promoter background also helps in raising funds at competitive rates. But the company is trading at a premium to its peers as stated by firms like SMC Capital, even the note by Karvy borkers is not too rosy and is high on expectations. Which is why we would not recommend this IPO for the faint hearted or a value investor.